There are good days to defend a government’s spending record, and then there was Tuesday. Phillip Coorey of the Australian Financial Review reports that Prime Minister Anthony Albanese used a caucus meeting to rally nervous Labor colleagues behind the government’s near-record level of spending — the spending to which the most recent interest rate rise has been linked, and the very issue on which a watchful Coalition is now pinning its comeback hopes.
The timing was not ideal. The International Monetary Fund’s latest World Economic Outlook, released on Tuesday, forecasts Australian inflation easing from 3.9 per cent this year to 3.1 per cent next year — progress, but still above the Reserve Bank of Australia’s target band of 2 per cent to 3 per cent. Two small humiliations sit inside that number. First, it would be the fifth-highest inflation rate among advanced economies, behind only Iceland, Greece, Austria and Andorra. Andorra. Second, Australia manages this while being one of just a handful of countries with rising unemployment. Paying more for everything, with fewer people in work, is not a pairing a treasurer wants on his record, and it lands on an electorate already carrying its worst mortgage burden in 30 years.
Albanese did not respond to the IMF by promising restraint. On the same day, the government announced another $633 million to subsidise private-sector wages in the charitable sector, and the prime minister’s message to caucus was that the spending program should be understood as an investment with an eventual economic and productivity dividend.
“Cost-of-living measures like free TAFE save money for people now, but deliver skills long-term,” he was quoted by a spokesman as telling the meeting. “Cheaper medicines save money for people now, but help with long-term health outcomes, same as bulk billing and urgent care clinics. Childcare reforms provide cost-of-living support now, but also help with long-term productivity.” The government, he added, will always look after people in ways that build the long-term health of the economy.
This is a real argument, and it may even be right — a trained workforce is worth more than an untrained one. But notice its shape: to every complaint that the government costs too much now, the answer is a dividend later, where later is far enough away never to be audited and close enough to keep promising. “We need to make sure as well that we’re focused on where are we at a year ahead, five years ahead, 10 years ahead. How do we set Australia up for a stronger future?” Albanese said.
Outside the party room, the business community keeps its own list of grievances: the decision to increase the taxation of trusts, the general direction of the tax-and-spend agenda, and — in the AFR’s words — last week’s hamfisted handling of credit card fees, when the Australian Tax Office said it would no longer accept credit card payments. Introducing Albanese at the Australian Chamber of Commerce and Industry’s annual dinner on Tuesday night, ACCI chief executive Andrew McKellar took what the AFR described as a veiled swipe at Treasurer Jim Chalmers, crediting the prime minister with stepping in to clear up the mess. “It was a decision taken without consultation and leaving many businesses uncertain about how they would manage the cash-flow consequences,” McKellar said. “It was undoubtedly a double standard and the reaction from small businesses around the country was immediate. Prime Minister, to your credit, your door was open. You engaged, you listened and you acted quickly to provide vital breathing space for small business.” Read slowly, that is a complaint wearing a compliment’s clothes: your government built the mess, and thank you for the mop.
Chalmers has troubles of his own — the AFR notes his aptitude for the job is coming under increasing question from colleagues — and he too spent Tuesday night at a lectern, defending his contentious budget tax increases in a speech to the left-wing think tank The Australia Institute. His argument was that the cost of standing still is worse: Labor, he said, risks being run over by the likes of One Nation if it does not act. “We are reforming the status quo, more than the far right and its billionaire backers would like us to, and perhaps more slowly than many of you would like us to,” he said. “We are not making that mistake, we are reforming the status quo in tax and housing and in other ways, in the interests of working people. Hoping the far right goes away or implodes again is not actually a strategy.”
So, in a single day, the government ran its defence of the same agenda in three registers. To the caucus: patience, the dividend is coming. To business: contrition, the door is open. To the left: think of One Nation. Each audience received exactly the version of the argument most flattering to itself, which is either message discipline or a hedge, depending on how nervy you are.
The one audience unaddressed in any of the three speeches was the IMF. Its numbers were out anyway: fifth-highest inflation in the developed world, unemployment rising, Australia climbing a league table that no one in the caucus room wants to top but everyone in it can read.